SHAREHOLDER SERVICES AGREEMENT
THIS AGREEMENT is entered into the 1st day of January, 1998, by and between
The PBHG Funds, Inc. a Maryland corporation (the "Fund"), and PBHG Fund
Services, a Pennsylvania business trust ("Fund Services").
WITNESSETH:
WHEREAS, the Fund is engaged in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, Fund Services serves as Administrator to the Fund and each of its
separate series (the "Portfolios") and classes and provides administrative
services pursuant to an administrative services agreement between the Fund and
Fund Services; and
WHEREAS, the Fund desires to retain Fund Services to provide certain
additional services to the Fund, its Portfolios and the holders of shares
thereof, which services are supplemental and related to services provided by DST
Systems, Inc. ("DST") pursuant to a transfer agency agreement between the Fund
and DST (the "DST Agreement"); and
WHEREAS, Fund Services proposes to engage UAM Shareholder Services Center,
Inc. ("UAM SSC") to assist in providing certain services provided for by this
Agreement pursuant to a sub-shareholder services agreement between Fund
Services and UAM SSC.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the Fund and Fund Services, intending to be legally bound,
hereby agree as follows:
1. Scope. In addition to the Portfolio and classes of shares thereof existing
on the effective date of this Agreement, the Fund may from time to time
hereafter create additional Portfolios and issue separate classes of its shares
of common stock or classify and reclassify shares of any Portfolio or class, and
the appointment effected hereby shall constitute
appointment for the provision of services with respect to all existing
Portfolios and classes and any additional Portfolios and classes unless the
parties shall otherwise agree in writing.
2. Appointment. The Fund hereby appoints Fund Services to perform such services
and to serve such functions as are set forth in Appendix A hereto, which
appendix is incorporated herein by this reference. Appendix A may not be amended
except by written agreement between the Fund and Fund Services. Fund Services
hereby agrees to perform such services and serve such functions as provided in
Appendix A in accordance with the terms and conditions set forth in this
Agreement.
3. Obligations Under DST Agreement. To the extent that the provisions or
requirements of the DST Agreement and any agreement related thereto may impose
obligations on Fund Services to provide services, conform to a standard of
conduct, adhere to a stipulated process or procedure, or otherwise undertake to
perform a defined duty or responsibility, or may require the Fund to ensure that
Fund Services fulfills such obligations, Fund Services shall perform such
obligations and shall at all times use reasonable care and act in good faith in
performing such obligations.
4. Duties and Responsibilities of Fund Services. In connection with the services
provided by Fund Services pursuant to this Agreement, Fund Services shall
directly or indirectly:
a. Personnel. Provide the services of personnel competent to perform the
obligations of Fund Services under this Agreement.
b. Facilities. Furnish, at its own expense, such office facilities,
furnishings, office equipment and other property and resources as are necessary
for the fulfillment of the obligations of Fund Services under this Agreement.
c. Books and Records. With respect to the services provided by Fund
Services, maintain customary records, and particularly shall maintain those
records required to be maintained pursuant to subparagraph (2)(iv) of paragraph
(b) of Rule 3la-1 under the 1940
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Act. Fund Services may send periodically to the Fund, or to where designated by
the Secretary or an Assistant Secretary of the Fund, all books, documents, and
all records no longer deemed needed for current purposes, upon the understanding
that such books, documents, and records will be maintained by the Fund under and
in accordance with the requirements of Rule 17Ad-7 adopted under the Securities
Exchange Act of 1934. Such materials will not be destroyed by the Fund without
the consent of Fund Services (which consent will not be unreasonably withheld),
but will be safely stored for possible future reference.
d. Reports to the Fund. Furnish to or place at the disposal of the Fund
such information, reports, evaluations, analyses, and opinions relating to the
services performed by Fund Services under this Agreement, and performed by UAM
SSC (or other third party service provider) under any sub-shareholder services
agreement (as provided for hereunder), as the Fund may reasonably request or as
Fund Services may deem helpful to the Fund to make an informed determination
regarding the rendering of services by Fund Services, the continuation of this
Agreement, and the payments contemplated to be made hereunder.
5. Fees. In consideration of the services performed by Fund Services under this
Agreement, the Fund shall such pay fees to Fund Services as are set forth in
Appendix B hereto, which appendix is incorporated herein by this reference. In
addition to the fees set forth in Appendix B, Fund Services shall be entitled to
reimbursement from the Fund for all reasonable out-of-pocket expenses without
xxxx-up incurred by Fund Services in connection with the performance of the
services provided for in this Agreement. Fund Services shall conduct an
evaluation of the fees payable under this Agreement at six month intervals and
shall advise the Fund as to any adjustments in fees that Fund Services deems
appropriate, but in any event, Appendix B may not be amended except by the
written agreement of the Fund and Fund Services.
6. Third Party Service Providers. The Fund agrees that Fund Services may enter
into a
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sub-shareholder services agreement or related agreements with UAM SSC or other
service providers to perform certain services provided for by this Agreement.
Fund Services' obligations and the standards of care under which Fund Services
has undertaken to fulfill such obligations, and the indemnification that Fund
Services has agreed to provide under this Agreement may not, however, be
impaired or assigned by Fund Services without the consent and approval of the
Board of Directors of the Fund.
7. Certain Representations and Warranties of Fund Services. Fund Services
represents and warrants to the Fund that:
a. It is a business trust duly formed and validly subsisting under the laws
of the Commonwealth of Pennsylvania.
b. It is duly qualified to carry on its business in the Commonwealth of
Pennsylvania.
C. It is empowered under applicable laws and by its Declaration of Trust
and Bylaws to enter into and perform the services contemplated in this
Agreement.
d. It is registered as a transfer agent to the extent required under the
Securities Exchange Act of 1934.
e. All requisite proceedings of the Trustees have been taken to authorize
it to enter into and perform this Agreement.
f. It has and will continue to have and maintain the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
8. Certain Representations and Warranties of the Fund. The Fund represents and
warrants to Fund Services that:
a. It is a corporation duly organized and existing and in good standing
under the laws of the State of Maryland.
b. It is an open-end management investment company registered under the
1940 Act.
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c. A registration statement under the Securities Act of 1933 has been filed
and will be effective with respect to all shares of the Fund being offered for
sale.
d. All requisite steps have been and will continue to be taken to register
the Fund's shares for sale in all applicable states and such registration will
be effective at all times shares are offered for sale in such states.
e. The Fund is empowered under applicable laws and by its Charter and
Bylaws to enter into and perform this Agreement.
9. Certain Covenants of Fund Services and the Fund.
a. Records are Property of the Fund. To the extent required by Section 31
of the 1940 Act, and the rules thereunder, Fund Services agrees that all records
maintained by Fund Services relating to the services to be performed by Fund
Services under this Agreement are the property of the Fund and will be preserved
and will be surrendered promptly to the Fund on request.
b. Financial Statements. Fund Services agrees to furnish to the Fund annual
reports of its financial condition, consisting of a balance sheet, earnings
statement and any other financial information reasonably requested by the Fund.
The annual financial statements shall be certified by the independent auditors
retained by the parent of Fund Services.
c. Information Concerning the Fund. The Fund agrees to furnish or otherwise
make available to Fund Services such information relating to the business and
affairs of the Fund as Fund Services may reasonably require to discharge its
duties and obligations hereunder. The Fund further agrees to provide Fund
Services with information and updates relating to new product and service
introductions and sales and marketing efforts that may reasonably be expected to
impact on shareholder or prospective shareholder telephone call volume so that
Fund Services can properly allocate the resources necessary to fulfill its
obligations under this Agreement.
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d. Cooperation in Shareholder Responses. The Fund agrees that the Fund
will, and shall cause the Fund's investment adviser to, cooperate with Fund
Services to the extent necessary to formulate appropriate responses to written
inquiries from shareholders concerning investment strategy and philosophy and
market commentary.
10. Quality Control.
a. Audits. Fund Services shall be responsible for periodically conducting
quality control audits with respect to telephone purchase, redemption and
exchange requests and account changes received and processed by Fund Services or
any third party service provider with which Fund Services has contracted to
perform any of the services provided for under this Agreement. Fund Services
shall promptly report the results of such quality control audits to the Fund.
b. Inspections. Fund Services shall permit the Fund and its authorized
representatives, including, but not limited to, the Fund's independent auditors,
to have reasonable access to the personnel and records of Fund Services, and to
make periodic inspections of the operations of Fund Services as such would
involve the Fund at reasonable times during business hours for the purpose of
monitoring the quality of services performed by Fund Services, and the level of
fees and reimbursements to which Fund Services is entitled, under this
Agreement.
c. Monitoring of Exchange Privileges. Fund Services shall use its
reasonable efforts to detect and prevent shareholder violations of telephone
exchange privileges as described in the Fund's prospectuses.
d. Service Improvement. Fund Services shall use its reasonable efforts to
keep current on the trends of the investment company industry relating to
shareholder services and to continue to modernize and improve its service
delivery mechanisms.
e. Year 2000 Compliance. Fund Services represents that its Information
System
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(as defined in Exhibit C) will be Year 2000 Compliant as set forth in Exhibit C,
attached hereto.
11. Liability and Indemnification.
a. Indemnification by the Fund. Fund Services shall not be responsible for,
and the Fund shall indemnify and hold Fund Services harmless from and against,
any and all losses, liabilities, claims, demands, suits, costs and expenses
(including reasonable attorneys' fees) which may be asserted against Fund
Services or for which Fund Services may be held to be liable, arising out of, or
are attributable to, the Fund's failure to comply with the terms of this
Agreement, or arising out of or attributable to, the Fund's negligence or
willful misconduct or breach of any representation or warranty of the Fund
hereunder.
b. Indemnification by Fund Services. The Fund shall not be responsible for,
and Fund Services shall indemnify the Fund, its officers and directors and hold
them harmless from and against, any and all losses, liabilities, claims,
demands, suits, costs and expenses (including reasonable attorneys' fees) which
may be asserted against the Fund or for which the Fund may be held to be liable,
arising out of, or attributable to, Fund Services' failure to comply with the
terms of this Agreement, or arising out of, or are attributable to, any
negligence or willful misconduct or breach of any representation or warranty of
Fund Services hereunder.
c. Notice of Potential Claims; Defense of Claims. Fund Services and the
Fund agree that each shall promptly notify the other in writing of any situation
which represents or appears to involve a claim which may be the subject of
indemnification hereunder, although the failure to provide such notification
shall not relieve the indemnifying party of its liability pursuant to this
Section 11. The indemnifying party shall have the option to defend against any
such claim. In the event the indemnifying party so elects, it will notify the
indemnified party and shall assume the defense of such claim, and the
indemnified party shall cooperate fully
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with the indemnifying party, at the indemnifying party's expense, in the defense
of such claim. If the indemnifying party elects not to defend against such
claim, the indemnified party shall be entitled to advance of reasonable expenses
to defend such claim. Notwithstanding the foregoing, the indemnified party shall
not enter into any settlement of such matter without the written consent of the
indemnifying party, which consent shall not be withheld unreasonably. The
indemnifying party shall not be obligated to indemnify the indemnified party for
any settlement entered into without the written consent of the indemnifying
party. If the consent of the indemnified party is required to effectuate any
settlement and the indemnified party refuses to consent to any settlement
negotiated by the indemnifying party, the liability of the indemnifying party
for losses arising out of or due to such matter shall be limited to the amount
to the rejected proposed settlement.
d. Except for violations of Section 17c. hereunder, in no event and under
no circumstances shall either party to this Agreement be liable to anyone,
including, without limitation, to the other party, for consequential damages for
any act or failure to act under any provision of this Agreement even if advised
of the possibility thereof.
e. Survival of Provisions. The obligations of Fund Services and the Fund
pursuant to this Section 11 shall survive the termination of this Agreement.
12. Limitations on Liability
a. Subcontractors. Nothing herein shall impose any duty upon Fund Services
in connection with or make Fund Services liable for the actions or omissions to
act of unaffiliated third parties such as, by way of example and not limitation,
Airborne Services, the U.S. mails and telecommunication companies, provided, if
Fund Services selected such company, Fund Services shall have exercised
reasonable care in selecting the same. The foregoing limitation of liability
with respect to actions or omissions of unaffiliated third parties shall not be
construed to relieve Fund Services of any obligations under Section 6 hereof
with respect to any services that Fund Services has agreed to perform under this
agreement that are ultimately performed by other parties.
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b. Portfolios as Separate Parties. Each Portfolio shall be regarded for all
purposes hereunder as a separate party apart from each other Portfolio. Unless
the context otherwise requires, with respect to every transaction covered by
this Agreement, every reference herein to the Fund shall be deemed to relate
solely to the particular Portfolio to which such transaction relates. Under no
circumstances shall the rights, obligations or remedies with respect to a
particular Portfolio constitute a right, obligation or remedy applicable to any
other Portfolio. The use of this single document to memorialize the separate
agreement of each Portfolio is understood to be for clerical convenience only
and shall not constitute any basis for joining the Portfolios for any reason.
13. Term of Agreement. This Agreement shall become effective on the day and year
first written above and, unless sooner terminated as hereinafter provided, shall
continue in effect for an initial period that will expire on December 31, 1998,
and thereafter shall continue in effect from year to year provided such
continuance is approved at least annually by the vote of a majority of the
directors of the Fund who are not parties to this Agreement or "interested
persons" (as defined by the 0000 Xxx) of any such party, which vote shall be
cast in person at a meeting called for the purpose of voting on such approval.
14. Termination.
a. Material Breach. This Agreement may be terminated by either party in the
event of a material breach of the Agreement by the other party upon thirty (30)
days' prior written notice to the other party; provided, however, that the
Agreement shall not terminate if such material breach is cured within such
thirty (30) day period.
b. Termination by the Fund. The Fund may, without payment of penalty,
terminate this Agreement upon 90 days' written notice to Fund Services.
c. Termination by Fund Services. Fund Services may, without payment of
penalty, terminate this Agreement upon 90 days' written notice to the Fund.
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d. Assignment. No assignment of this Agreement by Fund Services shall occur
without the written consent of the Fund and approval by the Board of Directors
of the Fund as described in Section 13 herein.
15. Notices. All notices to be given hereunder shall be deemed properly given if
given in writing, delivered in person, or if sent by U.S. mail, first class,
postage prepaid, or if sent by facsimile and thereafter confirmed by mail, (i)
if to Fund Services, to PBHG Fund Services, 000 Xxxxxxxxx Xxxx, Xxxxx, XX 00000,
Attn: Xxxxx Xxxxxxxx, and (ii) if to the Fund, to The PBHG Funds, Inc., 000
Xxxxxxxxx Xxxx, Xxxxx, XX 00000, Attn: Xxxxxxx Xxxxxxxxxx, or to such other
address as shall have been specified in writing by the party to whom such notice
is to be given.
16. Force Majeure. In the event Fund Services is unable to perform its
obligations or duties under the terms of this Agreement because of any act of
God, strike, riot, act of war, equipment failure, power failure or damage or
other causes reasonably beyond its control, Fund Services shall not be liable
for any losses, damages, costs, charges, counsel fees, payments, expenses or
liability to any other party (whether or not a party to this Agreement)
resulting from such failure to perform its obligations or duties under this
Agreement or otherwise from such causes. This provision, however, shall in no
way excuse Fund Services from being liable to the Fund for any and all losses,
damages, costs, charges, counsel fees, payments and expenses incurred by the
Fund due to the non-performance or delay in performance by Fund Services of its
duties and obligation under this Agreement if such non-performance or delay in
performance could have been reasonably prevented by Fund Services through
back-up systems and other procedures commonly employed by other persons in the
mutual fund industry who provide services similar to those to be provided by
Fund Services under this Agreement, provided that Fund Services shall have the
right, at all times, to mitigate or cure any losses, including by making
adjustments or corrections to any current or former shareholder accounts.
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17. Miscellaneous.
a. Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the Commonwealth of Pennsylvania,
except as such laws may conflict with the 1940 Act and the rules thereunder or
other applicable federal laws or regulations.
b. Severability. If any provision of this Agreement shall be held or made
invalid in whole or in part by a court decision, statute, rule, or otherwise,
the remaining provisions of the Agreement shall not be affected thereby. Invalid
provisions shall, in accordance with the intent and purpose of this Agreement,
be replaced by mutual consent of the parties with such valid provisions which in
their economic effect come as closely as legally possible to such invalid
provisions.
c. Confidentiality. Fund Services agrees on behalf of itself and its
employees to treat confidentially all records and other information relative to
the Fund and its prior, present, or prospective shareholders, except, after
prior notification to and approval in writing by the Fund, which approval shall
not be withheld unreasonably and may not be withheld where Fund Services may be
exposed to civil or criminal contempt proceedings for failure to comply, when
requested to divulge such information by duly constituted authorities, or when
so requested by the Fund.
d. Amendments in Writing. Any part of this Agreement or any appendix hereto
may be amended or waived only by an instrument in writing signed by the parties
hereto.
e. Headings and Captions. The headings and captions contained in this
Agreement are included for convenience of reference only and in no way define or
delineate any of the provisions hereof or otherwise affect their construction or
effect.
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f. Interpretation. Nothing herein contained shall be deemed to require the
Fund to take any action contrary to its Articles of Incorporation or Bylaws, or
any applicable statutory or regulatory requirement to which it is subject or by
which it is bound, or to relieve or deprive the Board of Directors of its
responsibility for and control of the conduct of the affairs of the Fund.
g. Enforceability by Successors and Assigns. All terms and provisions of
this Agreement shall be binding upon, inure to the benefit of and be enforceable
by the parties hereto and their respective successors and permitted assigns.
h. Survival of Representations, Warranties and Indemnification. The
representations and warranties, and the indemnification extended hereunder, if
any, are intended to and shall continue after and survive the expiration,
termination or cancellation of this Agreement.
i. No Joint Venture. Neither the execution nor performance of this
Agreement shall be deemed to create a partnership or Joint venture by and
between the Fund and Fund Services. It is understood and agreed that all
services performed hereunder by Fund Services shall be as an independent
contractor. This Agreement is between Fund Services and the Fund and neither
this Agreement nor the performance of the services provided for herein shall
create any rights in any third parties. There are no third party beneficiaries
hereto.
j. No Waiver. The failure of either party to insist upon the performance of
any terms or conditions of this Agreement or to enforce any rights resulting
from any breach of any of the terms or conditions of this Agreement, including
the payment of damages, shall not be construed as a continuing or permanent
waiver of any such terms, conditions, rights or privileges, but the same shall
continue and remain in full force and effect as if no such forbearance or waiver
had occurred.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective duly authorized officers, to be effective as of the day and
year first above written.
PBHG FUND SERVICES
By: /s/ Illegible
-------------------------------
Title: Treasurer
----------------------------
THE PBHG FUNDS, INC.
By: /s/ Illegible
-------------------------------
Title: V.P.
----------------------------
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APPENDIX A
Services
Fund Services generally shall be responsible for providing shareholder
services, including but not limited to the following:
1. Provide "General" Shareholder Support.
2. Process "Phone" Transactions
ACH Buys from Bank of record
ACH Redemption to Bank of record
Process Purchase Orders (Wire or Check settlement)
Wire Redemption to Bank of record
Account Exchanges between funds
Wire Redemption to Bank of record
3. Process "Basic" Account Maintenance
Stop/restart/defer systematic investment purchase
Increase/decrease a systematic investment purchase
Increase/decrease/defer/discontinue a systematic withdrawal plan
Add a beneficiary birth date
Change dividend/capital gains distribution option
Stop dividend mail
Add/change a dividend move
Combine identical accounts within same fund
Add/delete "stop mail" from an account
Stop/Replace a redemption check
Add/change/delete systematic exchange with the same registration
4. Research/Document/Request corrective processing by Transfer Agent
5. Correspondence Services (Adviser and Call Center Related Issues)
6. Problem Research and Resolution
7. Institutional Desk Servicing
Dealer Servicing
Account Maintenance
Dealer File Maintenance
Transaction Processing
Order Settlement Support
Adjustment Processing Support
NSCC Networking Support
Fund Info/Data Dissemination
8. Non-Signature Guaranteed address change
Stop/restart/defer a Systematic Monthly Investment (SIP)
Increase/decrease a Systematic Monthly Investment (SIP)
Increase/decrease/defer/discontinue a systematic withdrawal
plan (SWP)
Add a beneficiary birth date
Change dividend/capital gains distribution method
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Stop dividend mail
Add/change a dividend move
Combine identical accounts within the same funds
Add or delete stop mail from the account
Stop or replace a redemption check after 15 days
Add/change/delete systematic exchanges (SYSEXCH) with the same
registration
Correct minor errors in names on registration if clearly indicated
on the application
Reissue checkwriting drafts on a Cash Reserve account where the
privilege has been established
Link/unlink accounts for the INVESTOR statement product
(managers only)
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EXHIBIT C
YEAR 2000 COMPLIANCE
Page 1
Definitions:
"Embedded Control" shall mean any microprocessor, microcontroller, smart
instrumentation or other sensor, driver, monitor, robotic or other device
containing a semiconductor, memory circuit, BIOS, PROM or other microchip,
whether it is part of or operates in conjunction with any mainframes, midrange
computers, personal computers, notebooks, servers, switches, printers, modems,
drives or peripherals ("Hardware") or any other electronic or mechanical device
that operates, controls or monitors any function of any real or personal
property, including but not limited to any security, access control or
telecommunications devices or systems.
"Information System" shall mean any combination of any Hardware, software,
databases or Embedded Controls employed primarily for the creation,
manipulation, storage, retrieval, display and use of information in electronic
form or media.
"Year 2000 Compliant": shall mean:
(a) that each component of an Information System or any Embedded Control:
(i) is designed (or has been modified) to be used prior to and after
January 1, 2000; and
(ii) will operate without error arising from the creation, recognition,
acceptance, calculation, display, storage, retrieval, accessing, comparison,
sorting, manipulation, processing or other use of dates or date-based,
date-dependent or date-related data, including but not limited to century
recognition, day-of-the-week recognition, leap years, date values and interfaces
of the date functionalities; and
(iii) will not be adversely affected by the advent of the year 2000,
the advent of the twenty-first century or the transition from the twentieth
century through the year 2000 and into the twenty-first century.
(b) that the design architectures and functionalities embodying, reflecting
or affecting the criteria set forth in subparagraph (a), above, of all
components of an Information System (or the methods used to modify them) are
compatible and, when operated in, on or in conjunction with any other component
of such Information System, will not cause it or any of its components to fail
to satisfy the criteria set forth in subparagraph (a), above.
(c) that an Information System does not receive data from or communicate
with any component or Information System external to itself (whether or not such
external component or Information System is DST's or any third party's) that
does not conform to the criteria set forth in subparagraphs (a) and (b), above.
DST represents and warrants that all Information Systems of DST used in the
performance of DST's obligations under this Contract are Year 2000 Compliant.
DST covenants that it will take all actions necessary to ensure:
(a) that all Information Systems of DST and the databases used
therewith or created thereby:
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(i) shall remain Year 2000 Compliant at all times during the term of
this Contract;
(ii) shall be adequately protected from contamination by non-Year 2000
Compliant third-party communications received by any electro-mechanical or
electronic devices of DST; and
DST acknowledges and agrees that for the purposes of this Contract:
(a) the Fund may request, and DST will provide a detailed summary of
the Year 2000 Compliant status of DST's Information Systems and Embedded
Controls; and
(b) DST shall not be relieved of any liability or responsibility for
any losses to the Fund pursuant to paragraph 8 of this Agreement in respect of
any breach of DST's obligations pursuant to this Exhibit C.
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